California:

Calif. energy commissioner explains the Golden State's power problems

"California's way of life is threatened" by energy problems, according a recent report from members of the California Energy Commission. One of the authors of that report, Commissioner John Geesman, joins OnPoint to discuss how the state has bounced back from electricity price spikes and rolling blackouts in 2000. Geesman also talks about state plans to permit new power plants and address natural gas shortages. And he explains why state policymakers are moving ahead of the federal government when it comes to renewable energy and climate change, including a controversial effort to limit greenhouse gas emissions from cars and trucks.

Transcript

Colin Sullivan: Welcome OnPoint. I'm Colin Sullivan. Our guest today is Mr. John Geesman, a commissioner with the California Energy Commission. Mr. Geesman thanks for being here.

John Geesman: The pleasure is mine.

Colin Sullivan: You recently oversaw preparation of a report that found that California's way of life is threatened because of energy problems out West. Can you tell us what that meant by saying that the way of life is threatened?

John Geesman: Well, we haven't done a very good job of keeping up with our infrastructure needs. We've had four years since the electricity crisis of 2001 to do so and in my judgment we just haven't done enough.

Colin Sullivan: Now could you lay out what specific areas are the problems? I mean I would think that it's infrastructure, but also natural gas and also gasoline with refinery problems. Specifically, what's the major area of concern?

John Geesman: Well, on the electricity side we have permitted a little more than 7000 megawatts of projects that have not gone forward because they lack utility purchase contracts. On the transmission side our problems are well known. We haven't figured out a way to develop a proactive transmission planning or citing process. Instead we're extremely reactive to projects that applicants bring to us. On the renewable side we've actually made pretty good progress in stating some very aggressive goals. It's difficult to get the utility procurement process to process those contracts in a rapid and orderly fashion. I think we're probably best off in the energy efficiency area where our Public Utilities Commission has directed a little more than $2 billion in utility oriented conservation programs just in the last couple of weeks.

Colin Sullivan: Isn't the reality though that there's a natural gas supply problem in California and in order to solve that problem you'd have to import LNG, build some sort of import facility in California? What do you think of that?

John Geesman: I think that's right. And in 2003 my commission identified a need for LNG. We don't have any citing authority so we haven't tried to pick and choose between the several projects that have been proposed, but there's clearly a need for those types of imports.

Colin Sullivan: Now is resistance so strong in California? I mean the coast is such a big part of California tourism, such a big part of the industry, the economy. Will an LNG import facility fly?

John Geesman: I think one will be permitted and constructed. There's quite a bit of resistance to the project in Long Beach Harbor, not nearly as much resistance to the two projects proposed offshore. And the project that is being constructed in Baja California, which has been permitted by the Mexican government, that will ultimately contribute California supplies as well.

Colin Sullivan: Now FERC Chairman Pat Wood said that he gave California a D+ for its reaction since the California power crisis. You've sort of said that you think that was an optimistic or maybe a little bit of a charitable grade. California has not done well since the California power crisis, since 2000?

John Geesman: I don't think we've done enough. I'm a Democrat. I was appointed by a Democratic governor that spent a lot of time battling FERC. So Pat is not one of my avatars, but I think he's dead right on our infrastructure progress. And frankly I think that, to be generous, he was including FERC and himself in that grade. His successor, Joe Kelleher, more diplomatically characterizes Southern California as the most serious electricity supply situation in the United States. I think it's difficult to argue with that.

Colin Sullivan: So how do you solve that problem?

John Geesman: I think you need long-term procurement contracts right now flowing from the utilities in California. I think that there are a number of projects ready to go. The way our state does things a lot of those megawatts are likely to be from renewable projects, but some of them will be from conventional projects as well. We need to get moving.

Colin Sullivan: Now do you find yourself at odds with Governor Schwarzenegger on energy issues? He seems to have a little bit of a rosier outlook in terms of progress that's been made since he took over the governor's mansion in Sacramento. Do you think that he's a little bit too rosy in his assessment of the progress?

John Geesman: Well frankly, I think there's a remarkable congruence between the policies that he's articulated and those that my commission has embraced. I don't know where the public relations side of either the governor's office or the energy commission's office join, but I think substantively there's a remarkably similar view.

Colin Sullivan: Do you think there's too much of a bureaucratic web in California when it comes to energy citing? I mean I was trying to figure out in doing research for this show what exactly the California Energy Commission does. There's also the CAL EPA, there's also the California Air Resources Board. Is that the problem when it comes to citing new plants and setting new transmission infrastructure legislation?

John Geesman: There's also the Public Utilities Commission. There's also the California Independent system operator. There's also electricity oversight board. It is very difficult to make rational sense out of the proliferation of agencies involved in this area. But over the years, at least on the permitting side for new power plants, we figured out a way in which to do it under the energy commission's consolidated permitting authority. My commission thinks the same approach needs to be brought to transmission.

Colin Sullivan: Now there's a big proposition on the ballot this November that voters are going to vote on to sort of re-regulate the state's power market.

John Geesman: That's correct.

Colin Sullivan: It's called Proposition 80. First of all do you think it will pass? And if it does pass is that sort of the last nail on the coffin of the 1996 deregulation law?

John Geesman: Well, I don't think it'll pass, but I also don't think that we ever did away with regulation. It's a very heavily regulated market under any set of circumstances and certainly since 2001 it's become a more regulated process. I think there are a couple of problems with the ballot measure, particularly in the area of its restrictions on advanced metering technology or the ability to charge different rates for time of use. There are aspects that I think would be very counterproductive if the thing passed.

Colin Sullivan: Do you think California voters care about this issue? Do you think they're engaged?

John Geesman: I think its pretty low profile, and I don't think that if you took a survey now you'd find very much awareness of it at all.

Colin Sullivan: Going back, sort of historical, going back to 1996, do you think California wasn't prepared to deregulate as fast as the state intended to?

John Geesman: Well, I don't think we had any clear sense of what was going on in the demand area or whether our supplies would likely be adequate in the future. You combine that with a seriously flawed design and then a response to crisis that tended to compound the problem and you've got the makings of a very bad situation.

Colin Sullivan: Right. Now you're in town specifically to promote use of renewable energy. Can you talk about why you're here and what exactly your agenda is on renewable energy?

John Geesman: Well the American Council on Renewable Energy is a nationwide group, largely dominated at the governmental level by state governments that have chosen to get out in front of this issue. My state has adopted a 20 percent goal for electricity coming from renewables by the year 2010. And my commission and Governor Schwarzenegger have suggested we ought to strive for a 33 percent goal in 2020. You know the Congress, or at least the House was gridlocked over the question of whether there should be a 10 percent renewable standard. This is an area that the people in my state feel very strongly within. There's a lot of similar sentiment elsewhere in the country.

Colin Sullivan: Thirty-three percent? Is that doable?

John Geesman: It's clearly doable by resources that we have in state alone, but our intent is to try and create a West-wide renewables market. And to utilize electricity generated from wind farms and geothermal projects elsewhere in the West. We think that there is a lot of renewable capacity in the West and we think that the West Coast states need to be the leaders in developing it.

Colin Sullivan: Now on this issue you're seeing a trend that's also evident in climate change and also fuel economy.

John Geesman: Yeah.

Colin Sullivan: California and other West Coast states are sort of out in front on these issues. What do you think the problem is with the federal government? Do you think the federal government is moving too slow? Do you think, I mean a lot of people, a lot of Republicans in Congress say California is moving too fast. They're putting their economy in jeopardy by moving too fast towards these kinds of solutions. Why is California taking the lead and what's the problem with the federal government at this point?

John Geesman: Well I think that if you look at our state where the Internet was nurtured and built into a commercial industry, where biotech is going through the same process, where many of the improvements in the telecommunications industry happen, we have a very innovative inventive populace with, I think, higher demands on its government than is commonly the case elsewhere in the country. I don't think we're that different from other states, but we've nurtured that sense of let's get moving. And I think the same phenomenon is likely to go on elsewhere. The federal government, I think and I acknowledge national energy policy is extremely difficult because it brings out the worst parochialism in all of us. And our state has a fair amount of that parochialism. The federal government gets bogged down in these debates that are extraordinarily difficult to resolve, nuclear power, coal power, whether to change the CAFE standards. In California we're able to pick and choose a bit. And in areas where consensus exists we can move forward quite quickly.

Colin Sullivan: Are you, in a sense, saying that it's sort of impossible to approach a greenhouse gas reduction scheme on a national level because of those parochial problems?

John Geesman: I think you can have a ...

Colin Sullivan: Or it's easier to do in the West?

John Geesman: I think you're going to have the states way out in front of the federal government and that's already happening.

Colin Sullivan: Now do you feel like there's a problem in terms of what the greenhouse gas, I mean there's a plan in California that would affect automobiles in terms of meeting greenhouse gas reduction limits.

John Geesman: Right.

Colin Sullivan: Already Californians are paying some of the highest energy prices in the country. Are Californians willing to pay these higher energy prices for progressive climate environmental policies or is there going to be a pushback?

John Geesman: I think that our belief is the way to reduce these prices, over time, is to change the technologies that we rely on. And to expect more of our vehicle fleet than the federal government has been willing to expect.

Colin Sullivan: What about on issues like the solar roofs initiative? Can you give us an update on where that is? It's a big push in the spring and the summer. The governor wants to push this million solar roofs initiative. What's the progress there?

John Geesman: Well it became a little too popular last summer, before the Legislature adjourned. They put a couple of items in the bill that the governor considered to be poison pills. And as a consequence the bill stalled. I think in the next month or so we'll roll out an initiative that accomplishes the same objective, but goes through the existing authority of our Public Utilities Commission and my commission, the energy commission, to accomplish the same objectives. The Legislature comes back in January, and I'm sure there'll probably be a legislative response to our administrative proposal. Ultimately I think this is going to pass and I think it's going to result in a very significant initiative in solar energy.

Colin Sullivan: Now what are some other problems in this state on renewable energy though? I mean I know there's a local problem in the bay area with wind energy in Altamont. How are problems like that resolved? If you're going to expand renewable energy as fast as you'd like to, but then there's local problems with the killing of birds as you expand to wind energy in that Altamont Pass. How do you resolve that issue specifically?

John Geesman: I think the problem in the Altamont is particularly a function of the older outdated and frankly closer to the ground machines. Most of those machines are in the 60 to 150 kilowatt level of capacity. I think the way to approach that is to require those machines to be replaced by the newer modern 1.5 megawatt and above sized machines. Now that doesn't mean there's not going to be a pretty significant aesthetic clash, similar to what you've seen in Cape Wind in New England. But I think we need to have that debate in California. I'm pretty confident that the vast majority of the public wants to see these technologies move forward. And I think it will be significant, not just in California and not just in this country, but worldwide, if we have that debate and it's clear that an informed populace makes a clear choice to go forward with the technology.

Colin Sullivan: Do you think California has the right to set its own CAFE laws and set its own climate laws? I mean obviously I think you do, but you're setting up a conflict with the federal government. There was a recent report by the national highway traffic safety administration that sort of questioned California's ability, under the Constitution, to set its own CAFE laws if it's a matter of interstate commerce. What would your response be to that?

John Geesman: Well these aren't CAFE standards, let's get that real clear. These are Clean Air Act standards and what we have tried to do is maximize the ability to reduce CO2 emissions from vehicles. We're doing that because the federal government has not. Our actions are going to be emulated by a number of other states, perhaps Canada as well. And I think they'll have a big impact around the world. The problem will be who chooses to oppose us in court? And I think that ultimately this will be resolved by the United States Supreme Court. They're going to have to determine are these CAFE standards, which are prohibited to be adopted by the states under the interstate commerce clause or are they Clean Air Act standards?

Colin Sullivan: Will there be U.S. automakers opposing you in court?

John Geesman: They certainly are.

Colin Sullivan: Now doesn't it, one last question, doesn't it set up the possibility of sort of a splintered fleet of U.S. cars?

John Geesman: What would be the matter with that?

Colin Sullivan: Welt I don't know. Is that OK to have a splintered fleet?

John Geesman: You know I don't mind the fact that I have a choice of what types of vehicles I buy. I actually tend to think diversity is a good thing. I know that the American automotive industry, which I wouldn't hold out as a particular model of business success, the American automotive industry would prefer to see a one-size-fits-all approach to all regulatory standards. I don't think that's going to play well on the West Coast. And I don't think it will play well in a number of other states either.

Colin Sullivan: OK. John Geesman thanks for visiting us. Hope you come back.

John Geesman: Thanks for having me.

Colin Sullivan: Join us tomorrow for another edition of OnPoint. Until then I'm Colin Sullivan for E&ETV.

[End of Audio]